TEXAS PUBLIC POLICY FOUNDATION
PolicyPerspective
Breaking the Bank:
Robin Hood and Chapter 313
by Stanley Greer
Senior Fellow
Key Points
• Chapter 313 tax abatements
incentivize school districts to
provide tax abatements to every
business that applies because
they can pass the cost on to
taxpayers across the state.
• Chapter 313 and Chapter 41,
otherwise known as Robin Hood,
jointly create a situation whereby
relatively prosperous districts can
raise revenues to fund their own
operations more efficiently by
granting tax abatements to busi-
nesses rather than by collecting
taxes.
• Chapter 313 has played a major
role in transforming the funding
of Texas’ K-12 public schools
into an extremely complicated
and counterproductive game of
“beggar thy neighbor.”
November 2018
Armstrong Center for
Energy & the Environment
State Elected Officials Ought to Decide How State Taxpayers’
Money Is Allocated
Public school officials in districts benefiting from Chapter 313 windfalls have
naturally found it difficult to understand how anyone could see anything
objectionable in the gains they have reaped thanks to their good fortune and
negotiating skills. The harsh reality is that these deals are deeply problematic for
several reasons, regardless of what kind of business is receiving the property tax
abatement.
One problem is the ample historic evidence showing little or no long-term
educational benefit resulting from huge influxes of extra cash into school districts
when the increased funding is unaccompanied by meaningful changes in how
students are instructed or how teachers are recruited and rewarded for their
work. A still-unfolding and well-publicized case-in-point is the fate of Facebook
cofounder, Chairman and CEO Mark Zuckerberg’s $100 million gift to the
troubled public schools of Newark, New Jersey, which he first announced on the
Oprah Winfrey Show in September 2010.
This January, attorney, public relations executive, and dogged teacher-union
critic Richard Berman provided a disturbing rundown of how Newark schools
are faring years after they received $100 million from Mr. Zuckerberg and an
additional $100 million from other business leaders who matched his gift.
Mr. Berman pointed to new research showing that “nearly one-quarter of teachers
[in the district] miss at least one out of every 10 work days, one of the worst
absentee rates in the nation.” Mr. Berman also noted that, less than seven years
after accepting what was hailed as a “transformative” $200 million gift with few
strings attached, Newark schools are “again facing a $30 million deficit, driven by
excessive union contracts and tens of millions of dollars being wasted annually
on ‘rubber rooms,’ where excess and poor-performing teachers languish without
assignments because they can’t be fired” (Berman).
The dismal academic outcomes in Newark confirm that the $200 million
Zuckerberg and other business benefactors put into the city’s public schools was
wasted (Jackson):
Only one-third of Newark students are proficient in English. Only one-
quarter are proficient in [math]. In state tests of third- to eighth-graders, math
and English proficiency actually went down in all six grades between 2011
and 2014 following Mr. Zuckerberg’s . . . gift (Berman).
But the fact that many school districts have taken advantage of Chapter 313 to
expand their funding—sometimes dramatically, without having to persuade
ordinary taxpayers of the appropriateness of doing so and without having
a credible plan to use the money to improve school performance—isn’t the
fundamental problem. Even when the sole effect of the school property tax
continued
Breaking the Bank: Robin Hood and Chapter 313 November 2018
abatement is to transfer part of the burden of paying for
K-12 education from the locality to the state level and the
district does not extract any additional funding from the
business that benefits from the abatement, accountability in
government is undermined (Michels).
In Texas, sales and other taxes collected at the state level pay
for health and human services, higher education, and a host
of other public services in addition to helping cover, along
with local school districts and the federal government, the
cost of public K-12 education. The state should determine
how these funds are allocated to school districts, rather than
have the allocation be driven by local officials offering tax
breaks through the 313 process.
Legislators might determine there are legitimate reasons
to spend less on health and human services or higher
education in order to increase the amount of money sent
to certain local school districts so they can keep funding
for their operations at the same level even as they reduce
local property taxes for a business or businesses in their
jurisdiction. But under Chapter 313, this decision is taken
out of the hands of lawmakers who are accountable to state
taxpayers.
Nothing in the law prevents prosperous school districts with
ample property tax bases from using it to reduce the share
of their operating costs that is paid for by homeowners and
businesses in their communities and increase the share that
is paid by Texans across the state. In fact, as a consequence
of the perverse interplay between Chapter 313 and another
state law known as Texas Education Code Chapter 41, or,
more colloquially, “Robin Hood,” relatively prosperous
districts can actually raise revenues to fund their own
operations more efficiently by granting tax abatements to
businesses rather than by collecting taxes from businesses
and other property owners.
Chapter 313 Subsidies Especially Lucrative For
“Property-Wealthy” School Districts
A quarter century ago, after pushing unsuccessfully for a
statewide property tax that would have, to a large extent,
equalized per-pupil funding in otherwise vastly different
school districts throughout Texas, progressive-minded
reformers successfully fought for passage of Chapter 41.
This law initially required 34 school districts identified as
property wealthy to return a portion of the revenue they
generate through property taxes to the state, which then
redistributed that money to poorer districts across the state.
As Terri Gruca of KVUE-TV (ABC) in Austin reported
last fall, Robin Hood has metastasized since then. During
the 2017-18 school year, nearly 300 districts, or roughly
a quarter of all school districts in Texas, were labeled as
2 Texas Public Policy Foundation
property wealthy and consequently required to send money
to Austin that went into the state education budget (Gruca).
According to Gruca, Austin’s school district alone is
making nearly half a billion dollars in so-called “recapture
payments” per academic year. Altogether, such payments
to the state from property wealthy districts contributed
$2 billion to school funding in 2017-18. That’s 11 percent of
all state school funding (Gruca).
Today, in large districts like Austin and Houston and small
but property-rich ones like Round Rock Independent
School District (RRISD) in Central Texas, there is bipartisan
outrage about Chapter 41. Randy Staats, RRISD’s chief
financial officer, explained to Gruca why school officials and
teachers and parents and other taxpayers are upset:
We just adopted our fourth deficit budget in the last six
years. The deficit this year is $14.8 million. To start with
this year we’re generating additional tax collections of
almost $29 million based on our projections and we’re
only able to keep $1 million of that. . . .
It makes our budgets very challenging. Competitive
salaries and benefits are difficult to keep up with
sometimes and as other school districts provide salary
and benefit increases for their staff members, we’ve
got to do the same or we risk kind of falling behind
(Gruca).
Many state lawmakers representing jurisdictions with
property-wealthy school districts would love to repeal
Chapter 41 or scale it back significantly.
Unfortunately for them, neither of these objectives appears
to be politically feasible in Austin. But Chapter 41 does
not apply to supplemental payments to schools procured
under Chapter 313 deals. According to proponents in
property-wealthy districts like taxpayer activist Gary Snyder
of Port Royal, their local school officials must be crazy if
they won’t play along. In a July 2017 letter to the editor of
a local newspaper decrying several school board members
for having turned down a controversial Chapter 313 deal,
Snyder explained:
Chapter 313 is a state economic development tool
that allows school districts to keep millions of local
tax dollars rather than sending the money to Austin
through the Robin Hood requirement.
If the agreement is put into place and the project moves
forward, the district would keep approximately $1
million in additional property tax revenue a year during
most of the 16 years the agreement is in place. . . .
If a Chapter 313 agreement . . . is still an option, it
would be a great solution to the school district’s budget
shortfall. We can keep more tax dollars here, locally, to
November 2018 Breaking the Bank: Robin Hood and Chapter 313

improve our children’s education, give teachers and staff
well-deserved pay increases, and maintain and improve
school facilities (Snyder).
Purely from the perspective of a self-interested resident of
a property-wealthy community, Snyder’s argument may
be compelling. But when regarded from the perspective of
what is best for all the people of Texas, it underscores the
problems of Chapter 313.
Regardless of what one thinks of the merits of the Robin
Hood requirement (and there are certainly strong
objections to it that fall outside the scope of this paper),
it makes no sense at all to enable school districts that are
subject to it to avoid sending funds to Austin by granting
multi-year property tax abatements to businesses for which
the districts are reimbursed by the state.
In short, Chapter 313 has played a major role in
transforming the funding of Texas’ K-12 public schools
into an extremely complicated and counterproductive
game of “beggar thy neighbor.” This is only one of several
detrimental consequences of the law.
A
Editor’s Note: This is the second in a series of research papers
examining the problems with Chapter 312 and Chapter
313 local tax abatements. The papers will examine both the
overall problems with the abatements as well as their use for
renewable energy projects. This research is timely because
Chapter 312 will expire in 2019, and Chapter 313 will expire
in 2022. If not renewed by the Legislature in 2019, Chapter
312 and the ability of local governments to offer tax abate-
ments will go away. Likewise, if not renewed by the Legisla-
ture in 2021, Chapter 313 and the ability of school districts
to offer tax abatements will go away. The next two legislative
sessions will provide Texans and their elected state officials
the opportunity to examine whether these programs deliver
the jobs and economic development they promise. 

REFERENCES
Berman, Richard. 2018. “Mark Zuckerberg’s Other Nightmare.” Washington Times, January 8.
Gruca, Terri. 2017. “Robin Hood System: Saving Our Schools or Robbing Our Kids’ Futures?” KVUE-TV, November 3.
Jackson, Molly, 2015. “Newark’s $200 Million Education Experiment: Who Are the Winners?” Christian Science Monitor,
September 22.
Michels, Patrick. 2016. “Free Lunch: Meet Chapter 313, Texas’ Largest Corporate Welfare Program.” Texas Observer, March 14.
Snyder, Gary. 2017. “The Answer to PIISD Budget Shortfall? Rio Grande LNG Chapter 313 Agreement.” Los Fresnos News,
July 21.

www.TexasPolicy.com 3
 About the Author
Stanley Greer is a senior fellow at the Texas Public Policy Foundation and a senior
research associate for the National Institute for Labor Relations Research (NILRR), based
in Springfield, Virginia. He is also the newsletter editor for the National Right to Work
Committee, with which NILRR is affiliated. Greer received a bachelor’s degree from
Georgetown University in 1983 and a master’s from the University of Pittsburgh in 1986.
He and his wife Carol have six children and live in Fairfax, Virginia.

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